How To Setup and Start A Petrol Filling Station Business

You will agree with me that Premium Motor Spirit (PMS) also known as petrol is a very useful and valuable resource in the various activities of people, companies, industries, organizations etc. Most cars in Nigeria uses petrol to run their engines, also most household generating sets are ran mostly on petrol.

Due to the epileptic power supply in the country, business schools, hospitals, churches, mosques etc resort to providing their own electricity instead of relying on
Power Holding Company, with the millions of Cars and generators imagine the volume of petrol that will be consumed daily. As it is now, Nigeria is the 8^th largest oil producing country in the world with crude oil deposits in the South-South, South-East and South West of the country, Nigeria is also one of the biggest consumer of oil in Africa with about 40litres being consumed daily.

With the rate of oil consumption in Nigeria, it will be very business wise to delve into the business as everything about oil is money, and it is very easy to make huge profit from selling petrol if properly managed and you have the necessary experience and skills. Just like any other business you have to possess some skills and experience so as not to rush in and rush out as some people have got their fingers burnt due to lack of adequate knowledge of the business.

You don’t need to get panic as I will be taking you through the steps and requirement needed to run a Petrol Filling Station successfully. These are the things you need to consider, but before this you need to decide if you want to be an Independent Marketer or Dependent Marketer, wait as I will be explaining the differences between the two.

Independent Marketer

An Independent Marketer is a person who owns a Petrol Filling Station in his own name and buys products directly from the Nigeria National Petroleum Corporation (NNPC) and also has a representative at the Petrol Products Marketing Company (PPMC) depot by the NNPC.

Advantages of being an Independent Marketer

You will be able to use your desired name to run your business and build your own brand name.

You get your products from NNPC Depots directly at a cheaper price.

You earn a certain amount of money as you lift per litre of petrol.

You can source for your product anywhere you like.

You will be able to do your business as you wish according to your terms and conditions without being under a company’s policies.

Disadvantages of being an Independent Marketer

You must have your own tanker or partner with a Haulage Company in transporting your products and might sometimes delay in delivering your products.

You are the one in charge of marketing your products and this will cost you some money.

You must pay N5000 for insurance and association fee to the Independent Petroleum Marketers Association of Nigeria (IPMAN) anytime you lift petroleum product.

You bear all the risks involved with the movement of petroleum products from the depot to your filling station.

You must find means to afford the minimum quantity of petroleum product you can buy from NNPC depot which I a 30,000 Litre tanker costing 2-3 Million Naira or more.

Dependent Marketer

A Dependent marketer is one who holds a franchise of a big oil marketer and given the right to market your products under their brand name, also making sure they brand your facilities to their own name and logo.

Example of this is building a petrol filling station and applying to be a franchise of Forte Oil, all the facilities and the entire petrol station will be branded in Forte Oil’s name, color, logo etc but that doesn’t change the fact that you still own the filling station but that you are only using their goodwill to market your product.

Advantages of being an Independent Marketer

You sell your products quickly and get more customers as you will be selling under their brand name and goodwill.

You don’t need to have any representative or agent to be at the NNPC depot on your company’s behalf as you get covered by your major marketer

You don’t need to spend on advertising your business because your major marketer brand gets you covered.

Your petroleum product will be delivered to you promptly and directly to your petrol filling station.

Disadvantages of being an Independent Marketer

You won’t have the opportunity in building your own desired brand name.

You will be regulated by your major marketer terms and conditions regarding the price you must sell your products and the products you must sell.

You will lose the opportunity of gaining higher profit because the prices from the major marketers are higher.

Requirements in building Petrol Filling Station

Feasibility Study

Adequate research has to be carried out in form of feasibility studies on the business structure, which type of marketer you want to be, profitable location etc. This is very important because establishing a petrol filling station requires huge amount of money which must be managed properly to avoid loss.

Good Location

It is very important for your petrol filling station to be closer to a T-Junction so that vehicles from all the three roads will be able to access it easily, and should be along the major road so that vehicles passing will be able to patronize you, it should also be closer to bus-stops so that your sales can increase as more vehicles will patronize you due to closeness, it can also be closer to roundabouts or U-turns to increase sales.

Land

The minimum property requirement to build a petrol filling station is 2 plots of land so that their will be enough space for vehicles to queue and exit successfully. You need to negotiate the price of your land as most property agents on hearing you want to build a petrol filling station will definitely hike the price of the land. You may also lease a land or buy up an existing petrol station.

Underground Storage Tank

You need to sink an underground storage tank which acts as storage for fuel after acquiring your property, doing proper land survey and structural design. The tanks come in various sizes such as 30,000 litres, 35,000 litres, 40,000 litres, 60,000 litres and so on. It is advisable to buy the 40,000 or 60,000 litres so as to give space to store extra fuel because you will need to sell all your fuel finish before lifting a new one if you are using storage tank like 30,000 litres.

Construct your Petrol Filling Station

You need to get a good petrol station construction engineer to construct a standard on with the required items that must be in place. Below are what is needed in the construction process:

Building

You can decide to build a bungalow or a storey building depending on the space available and what type of other things you want to add like Supermarket, Car wash, Restaurant, Auto Clinic etc.

Canopy

This is the shade that is constructed to cover the petrol pumps. It is very important to provide the canopy as this is what will prevent the petrol pumps and the attendants from sun and rain.

Fence

The regulatory authorities required that a petrol station must fence the three sides of the filling station leaving one side alone for the entry and exit of vehicles.

Hard Flooring

You can make use of interlocking blocks or hard concrete for the flooring due to the pressure of different heavy vehicles that will be patronizing your filling station

Power Generator

Due to the epileptic power supply in the country, it is very important to have an alternative steady source of power by having a standby generator because a petrol station needs a good supply of power as it will be working throughout the day, it is also one of the regulatory requirements need for approval.

Electronic Pumps

Electronic pumps are needed to dispense fuel, 3-6 electronic pumps will be okay for you depending on the size of your filling station and the type of approval you are granted.

License and Approval

Before you can start operating a petrol filling station you must be licensed and get approval from the Department of Petroleum Resources (DPR). You can check their website at www.dpr.gov.ng for details.

Employ Workers

After getting approval and license from DPR, these are the list of workers you will employ:

Security Men

Security is very important in operating a petrol filling station due to the cash flow it involves and seems to be one of the target of armed robbers especially late in the night and during weekends. So you need to employ able security men to handle that.

Petrol Attendants

You need petrol attendants for each of the petrol pumps that will serve your customers in dispensing petrol, at least you need to employ 2 persons for each pump. For example; 4 pumps x 2 persons equals 8 persons

Cashier

This is the person who will be in charge of handling cash and keeping records of the transactions.

Supervisor

This is the person who will supervise everything if it is in order or not regarding the petrol station facilities and the workers. You must ensure you employ a reliable and trustworthy person for this position.

Manager

This is the overall superior person in charge of the total function of the filling station and must have cognate experience in the oil and gas business, you must carefully select your manager and must ensure he/she is reliable, honest and trustworthy because he/she can make or mar your business. Every other workers reports to the manager while he/she is accountable to you.

If you follow the steps and guides above, it is very sure you are definitely going to be successful and make profits when you venture into petrol filling station business. Please feel free to use the comment box for any questions, suggestions, enquiries etc.